My client was mistakenly paid double her actual salary between 31st August and 31st December 2009. Her employer is asking her to repay this money, which totals £2380. She has been paid the correct salary since January.

I asked the HB office to reassess her entitlement Sept-Dec 09 (which had been classed as nil due to the high income) on the basis of what she should have earned rather than what she was actually paid.

I received a letter dated 25/3 stating that they agree to revise her assessment & asking for further information, which she duly provided.

Today I have been told that they are continuing to use her actual overpaid income as the basis of the assessment and this results in a nil award for the period in question.

Is there any challenge to this decision?
Thanks very much.

In my view, the LA is wrong. The default position for income is that it is taken into account over the period it is in respect of (Tax Credits being an express exception by way of legislation). Where money was being overpaid in respect of period "X" AND is being recovered, the amount to be taken into account for "X" is the amount that *should* have been paid.

The only exception is where recovery of the overpaid money is not being sought, in which case the LA would be correct.

Commissioners / Upper Tribunal decisions that may be of interest:

CH/2349/2002
CIS/0590/1993
R(SB) 21/86

In all the above, it was found that earnings should be attributed to the period in question.

CDs/UTDs involving other types of income include CH/1561/2005, CH/0325/2003 & CIS/0683/1993.

On a slightly different tack to Kevin's (and in part because I'm not sure any of the above authorities consider the issue directly) I once had a very similar case where the authority insisted both on taking the overpaid earnings into account in full and then refusing to deduct from the claimant's ongoing earnings the amount that was being deducted by her employer for recovery - this on the basis that the only deductions allowed from earnings when net earnings are calculated are those specified in reg. 36 of the HB regs. (i.e. tax, NI and half of any claimant contribution to an occupational pension scheme - plus the deductions allowed under Schedule 4).

Ended up having to argue that if that is all there is to it there would be no need for a separate reg. (reg 35) to define earnings. That reg. defines earnings as "remuneration or profit derived from employment" and is closely paralleled in tax legislation. One factor that is useful in determining whether a payment is "derived from" employment is whether the employee has a contractual right to it - an employee has no contractual right to retain any overpayment. Should the employer not recover, then as Kevin indicates, the claimant does not escape with having that extra income disregarded simply because it does not meet the definition of earnings under reg. 35 - the unrecovered overpayment would be income other than earnings and taken into account and calculated accordingly under reg. 40.

Thanks very much for your replies - that's really useful

Thu 15-Apr-10 03:23 PM by Kevin D

I've just realised there is another CD which goes further than the "attributable" argument. It also potentially firms up the "correct income to be taken into account argument".

In R(H) 1/05, Cmmr Powell (as was) found that all income counted, including overpaid benefits, UNLESS the claimant could show the overpaid income was being recovered.

Maybe I'm reading too deeply into that, but it does seem that by implication that where the overpaid income was being repaid, it didn't count as income for the period in question.

NB: This doesn't normally apply to Tax Credits as there is specific legislation for the treatment of TC income.

The case above is very informative but seems only to deal with Income. I have a case where a tenant who was getting IS failed to declare a sum of money that put him just over the capital limit for both IS and H/CTB and both are seeking to recover their respective overpayments. If the diminishing capital rules are applied to IS then it shoud have restarted after about three weeks and the H/CTB along with it. On this basis we are contesting the amount that they are trying to recover although not the fact that it was overpaid as this was , unfortunately, clearly due to the Cl. failing to disclose.

The complication comes with a second influx of capital about six months after the first. As IS had continued paying the claimant had not used very much of his existing capital and the second payment put him about £4,000.00 over the capital limit

How then should the capital at the time of the second capital payment be calculated? Should it be the second influx of capital plus the actual amount my cl. had in his bank account or plus the amount he would have had if IS had stopped and then restarted at a reduced rate once his capital fell below the £16,000.00 limit?

the latter, surely.

CH/0314/2007 may indirectly assist - "method two". A copy is being sent to Rightsnet.

The "new" capital is only added to actual capital from the date it is held. The diminution (I'm assuming this is HB reg 103 and the IS equivalent?) of the overpayment is cumulative in any case - it doesn't restart so long as there is no break in the overpayment.

If it is diminution at issue, there should be three separate, independent, calculations - one each for HB, CTB and IS respectively.

here a link to CH/0314/2007

thanks to kevin for sending it to us.

cheers ros